Amazon, Apple TV+ Partnership a Win-Win for Both Parties
November 4, 2024
Amazon and Apple. Two titans of the digital age, each with distinct philosophies and approaches to business. Amazon, the sprawling online retailer, thrives on openness, embracing a vast ecosystem of partners and services. Apple, the sleek purveyor of premium devices and the world’s most valuable company — boasting a market cap of $3.572 trillion in late October 2024 compared to Amazon’s $1.984 trillion — cultivates an insular environment, where its products and services reign supreme. This fundamental difference is at the heart of their strategies, and it’s playing out in a fascinating way in the battle for streaming dominance.
Inside Amazon’s sprawling fulfillment center, a symphony of organized chaos unfolds. Thousands of workers, pick, pack, and ship an endless stream of orders. Outside, a fleet of delivery vans weave through traffic to deliver every retail good imaginable, from shaving cream to 98-inch QLED TVs — upwards of 2 million packages a day in the United States alone.
Meanwhile, in the sleek, minimalist confines of an Apple Store, customers browse gleaming iPhones and MacBooks, their fingers gliding across touchscreens. A Genius Bar technician patiently troubleshoots a software issue while a creative professional edits a video on a powerful iMac. This is Apple, a purveyor of premium technology, a master of design and user experience, a company that has cultivated a loyal following with its elegant and intuitive products.
But even giants face challenges. In the cutthroat world of streaming, Amazon’s Prime Video finds itself jockeying for position with Netflix and Disney+. Content is king, and while Amazon pours billions into original programming — including acquiring Metro-Goldwyn-Mayer (MGM) with its vast catalog of films and television shows, and securing the rights to NFL Thursday Night Football — it strives to capture the same cultural zeitgeist as its rivals.
Subscribe HERE to the FREE Media Play News Daily Newsletter!
Apple TV+, meanwhile, has struggled even harder to make a significant dent in the streaming landscape. Despite launching around the same time as Disney+ in 2019, and boasting such acclaimed shows as “Ted Lasso” and “Severance,” Apple TV+ lags significantly behind its rivals in terms of subscriber count. While Netflix has more than 282 million subscribers worldwide and Disney+, 164 million, Apple TV+ has just 40 million subscribers globally. This disparity is even more striking when considering the price point: Apple TV+ is significantly cheaper than both Netflix and Disney+, yet its growth rate continues to lag. Recent reports even suggest that Apple TV+ subscriber growth has slowed considerably, raising questions about the service’s long-term viability and Apple’s overall content strategy.
It’s worth noting that Apple’s foray into content with Apple TV+ represents a departure from its traditional strategy. While Apple Music thrives as a “pipe,” delivering music created by others (with the exception of occasional live performances), Apple TV+ requires the company to compete head-to-head with established content creators. This raises the question of whether Steve Jobs, with his focus on hardware and software, would have approved of this move. Perhaps he envisioned Apple as a ubiquitous provider of devices and platforms, leaving the messy business of content creation to others.
Amazon’s standing on the subscription streaming front is a little fuzzy, because while the company overall has more than 200 million Prime subscribers, it does not break out specific Prime Video-only subscribers, which means a true streaming subscriber count is anyone’s guess.
What is clear, however, is that Amazon has shrewdly carried over its aggregation strategy from retail to streaming. In addition to its original content, Amazon’s Prime Video service offers more than 100 add-on subscription options, including streaming giants Max and Paramount+, as well as such other services as BET+, Starz, ViX and Acorn TV. It’s a smart strategy, and driven, no doubt, by the fact that Amazon is a data powerhouse. Every click, every purchase, every streamed show is meticulously tracked and analyzed. This deep understanding of customer preferences allows Amazon to anticipate needs and offer personalized recommendations, creating a flywheel of engagement and loyalty.
To further fuel its streaming ambitions, Amazon has embraced a strategy that blurs the lines between traditional television and on-demand streaming. Like Netflix, Amazon has introduced advertising to its platform, offering a lower-cost, ad-supported tier to Prime members. This move, while potentially irking some viewers, opens up a lucrative new revenue stream. The company also has innovative ways to promote its advertisers both on and off the platform, from targeted ads within Prime Video to “sniping” — placing ads on delivery boxes that reach consumers directly at their doorstep.
This approach to advertising further differentiates Amazon from Apple, which has steadfastly resisted incorporating ads into its streaming service.
The fact that Apple TV+ recently broke out of its walled garden and is now also available as a Prime Video add-on sub is a win-win for both parties. For Apple, it provides access to Amazon’s massive customer base and a chance to expand the reach of its critically acclaimed shows. For Amazon, it’s a way to bolster its Prime Video offerings even further, adding high-quality content without the massive investment needed to produce it themselves. But who gets what from this deal? While the exact financial details remain confidential, industry analysts speculate that Amazon likely takes a cut of each Apple+ subscription sold through its platform. This could be a significant revenue stream for Amazon, further enhancing the profitability of its Prime membership program. Apple, in turn, benefits from increased subscriber numbers and potentially lower customer acquisition costs.
By offering Apple+ alongside subscriptions to Disney+, Max, and others, Amazon transforms itself into the ultimate entertainment hub. It’s no longer just a competitor in the streaming wars; it’s the arena where the battles take place. Now, if only Amazon could get Netflix to come aboard …
Rob Tonkin is a radio and music industry marketing veteran with a keen interest in film and media. He is a consultant, advisor and speaker and is currently working on his memoir. He may be contacted at robtonkin@gmail.com.